Industry News

Rate cut could be Fed’s next move

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Expectations that the Federal Reserve will cut the federal funds rate this year rose Tuesday after Sen. Chris Dodd said Fed Chairman Ben Bernanke is "prepared to use all the available tools at his disposal" to keep money flowing to mortgage lenders. The Bush administration, however, remains opposed to lifting caps on Fannie Mae and Freddie Mac's lending portfolios. Dodd, the Connecticut Democrat who chairs the Senate Banking Committee, said he did not specifically ask for a cut in the federal funds rate -- the rate banks charge each other to loan overnight -- during a meeting Tuesday with Bernanke and Treasury Secretary Henry Paulson. To do so would create the impression he was putting political pressure on an independent agency, Dodd said after the meeting. The presidential hopeful said the issues he raised with Bernanke and Paulson included lifting caps on Freddie Mac and Fannie Mae's lending portfolios, encouraging lenders to use the Fed's discount window, banning predatory lending...